Increasing Access to Renewable Energy Project
Total Page:16
File Type:pdf, Size:1020Kb
Project Number: 49450-015 November 2019 Pacific Renewable Energy Investment Facility Tuvalu: Increasing Access to Renewable Energy Project This document is being disclosed to the public in accordance with ADB's Access to Information Policy. CURRENCY EQUIVALENTS (as of 17 September 2019) Currency units – Australian dollar/s (A$) A$1.00 = $0.69 $1.00 = A$1.46 ABBREVIATIONS ADB – Asian Development Bank BESS – battery energy storage system CO2e – carbon dioxide equivalent DMC – developing member country GDP – gross domestic product kW – kilowatt kWp – kilowatt-peak MW – megawatt MWh – megawatt-hour PAM – project administration manual MOF – Ministry of Finance MTET – Ministry of Transport, Energy and Tourism TA – technical assistance TEC – Tuvalu Electricity Corporation NOTE In this report, "$" refers to United States dollars, unless otherwise stated. Vice-President Ahmed M. Saeed, Operations Group 2 Director General Carmela D. Locsin, Pacific Department (PARD) Director Olly Norojono, Energy Division, PARD Team leader Cinderella Tiangco, Senior Energy Specialist, PARD Team members Tahmeen Ahmad, Financial Management Specialist, Procurement, Portfolio and Financial Management Department (PPFD) Cynthia Ambe, Operations Assistant, PARD Ninebeth Carandang, Senior Social Development Specialist, PARD Taniela Faletau, Safeguards Specialist, PARD Jane Fantilanan, Associate Project Analyst, PARD Syed Hussain Haider, Senior Infrastructure Specialist, PARD Mairi MacRae, Social Development Specialist (Gender and Development), PARD Kevin Moore, Senior Procurement Specialist, PPFD Sivou Beatrice Olsson, Country Coordination Officer, Pacific Subregional Office, PARD Douglas Perkins, Principal Counsel, Office of the General Counsel Eun Young So, Energy Specialist, PARD Jean Williams, Senior Environment Specialist, PARD Peer reviewer Susumu Yoneoka, Energy Specialist (Smart Grids), Sustainable Development and Climate Change Department In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. CONTENTS Page PROJECT AT A GLANCE MAP I. BACKGROUND 1 II. THE PROJECT 1 A. Rationale 1 B. Impacts and Outcome 3 C. Outputs 3 D. Summary Cost Estimates and Financing Plan 4 E. Implementation Arrangements 5 III. DUE DILIGENCE 5 A. Technical 5 B. Economic and Financial 6 C. Governance 7 D. Poverty, Social, and Gender 8 E. Safeguards 8 F. Summary of Risk Assessment and Risk Management Plan 9 IV. ASSURANCES 10 V. THE PRESIDENT’S DECISION 10 APPENDIXES 1. Design and Monitoring Framework 11 2. List of Linked Documents 14 Project Classification Information Status: Complete PROJECT AT A GLANCE 1. Basic Data Project Number: 49450-015 Project Name Increasing Access to Renewable Energy Department/Division PARD/PAEN Project Country Tuvalu Executing Agency Ministry of Finance Borrower Government of Tuvalu (formerly Ministry of Finance and Economic Development) Country Economic https://www.adb.org/Documents/LinkedDocs/ Indicators ?id=49450-015-CEI Portfolio at a Glance https://www.adb.org/Documents/LinkedDocs/ ?id=49450-015-PortAtaGlance 2. Sector Subsector(s) ADB Financing ($ million) Energy Renewable energy generation - solar 6.00 Total 6.00 3. Operational Priorities Climate Change Information Addressing remaining poverty and reducing inequalities CO2 reduction (tons per annum) 844 Accelerating progress in gender equality Climate Change impact on the Medium Tackling climate change, building climate and disaster resilience, and Project enhancing environmental sustainability Making cities more livable ADB Financing Strengthening governance and institutional capacity Adaptation ($ million) 0.20 Mitigation ($ million) 5.80 Sustainable Development Goals Gender Equity and Mainstreaming SDG 1.4, 1.5 Effective gender mainstreaming (EGM) SDG 5.5 SDG 7.2 Poverty Targeting SDG 10.3 Geographic Targeting SDG 13.a 4. Risk Categorization: Low . 5. Safeguard Categorization Environment: B Involuntary Resettlement: C Indigenous Peoples: C . 6. Financing Modality and Sources Amount ($ million) ADB 6.00 Sovereign Project grant: Asian Development Fund 6.00 Cofinancing 0.00 None 0.00 Counterpart 0.48 Government 0.48 Total 6.48 Currency of ADB Financing: US Dollar Source: Asian Development Bank This document must only be generated in eOps. 04102019181907111697 Generated Date: 25-Oct-2019 13:46:52 PM ADB'S DEVELOPING MEMBER COUNTRIES IN THE PACIFIC TUVALU NORTHERN INCREASING ACCESS TO MARIANA ISLANDS HAWAII FOGAFGUAM ALE MARSHALL ISLANDS N O R T H P A C I F I C O C E A N RENEWABLE ENERGY PROJECT Fualefeke FEDERATED STATES REPUBLIC OF OF MICRONESIA PALAU Mulitefala Amatuku Tepuka NAURU Tegako I N D O N E S I A PAPUA K I R I B A T I Lakena NEW GUINEAFualopa Matagi SOLOMON TUVALU TIMOR-LESTE ISLANDS SAMOA NANUMEA VANUAL TU a g o o n COOK Fuafatu ISLANDS FRENCH FIJI POLYNESIA NORTHERN ISLANDS FUNAFUTINIUE NEW TONGA A U S T R A L I A CALEDONIA NIUTAO Vasafua Fatato S O U T H P A C I F I C O PCapaelise E A N Funamanu NANUMAGA Fuakea Falefatu Tefala Mateika N E W Z E A L A N D Lua Motu Tuamotu FUNAFUTI ATOLL Tegasu Funafala NUI Avalau Telele Meang Motuloa Tokinevai NUI L a g o o n Fenuatapu Pongalei Fenuatapu VAITUPU CENTRAL ISLANDS Fuunaota Lafaga Fale Motulalo S O U T H P A C I F I C O C E A N NUKUFETAU FOGAFALE Fualefeke Tegako Fuafatu FUNAFUTI NUKUFETAU Fuunaota Funafala Sakalua Lafaga NUKULAELAE Tumuiloto L a g o o n Fagaua Niuoku Fale NUKULAELAE Tumuiloto Motulalo L a g o o n Fangaua Niuoku SOUTHERN ISLANDS National Capital Teafatule Airstrip Fetuatasi Road Reef/Atoll NIULAKITA Boundaries are not necessarily authoritative. N This map was produced by the cartography unit of the Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this 0 2.5 5 map do not imply, on the part of the Asian Development Bank, any judgment on the Inset legal status of any territory, or any endorsement or acceptance of such boundaries, colors, denominations, or information. 0 20 40 60 80 Main Kilometers (km) 19TUV ABV I. BACKGROUND 1. On 22 June 2017, the Board of Directors of the Asian Development Bank (ADB) approved 1 the Pacific Renewable Energy Investment Facility.0F The facility will finance renewable energy 2 projects in the 11 smallest Pacific island developing member countries (DMCs).1F It has an overall estimated cost of $750 million, including ADB financing of up to $200 million. Upon approval, the Board delegated authority to the President to approve loans and/or grants to each targeted country for qualifying projects. 2. The facility will finance a grant to Tuvalu for the Increasing Access to Renewable Energy Project. The project will help the Government of Tuvalu expand access to modern energy services; improve the quality, reliability, and climate resilience of service; reduce reliance on fossil fuels for power generation; and reduce the cost of generation. The project will decrease the cost of supply by partially replacing diesel power with solar power. II. THE PROJECT A. Rationale 3. Country background. Tuvalu is a Polynesian country in the Pacific region, about 1,200 kilometers (km) north of Fiji. The country has a total land area of 26 square km and an exclusive economic zone of 900,000 square km. It is composed of nine atolls and islands, of which Funafuti is the most populated. It is extremely remote from all markets and most resources. Like many other small Pacific islands, Tuvalu’s electricity production relies heavily on imported diesel fuel, transported over long distances across the ocean and subject to climate change–related supply disruptions. As of September 2017, more than 72% of electricity in Tuvalu was diesel generated. This heightened climate change and energy security problems and caused high per capita 3 greenhouse gas emissions.2F Tuvalu has about 16% renewable energy generation with 98% of households having access to electricity. The focus of the government is to increase the renewable energy penetration on the outer islands to 100%, to be followed by Funafuti. About 7%–10% of gross domestic product (GDP) is spent on imported fuel (depending on oil prices), making energy the costliest sector of the Tuvalu economy. 4. The vision of Tuvalu’s eighth national development plan, Te Kakeega III: National Strategy for Sustainable Development 2016–2020, foresees a more protected, secure, and prosperous Tuvalu; healthier people who are more engaged in national, regional, and international forums; and a government that encourages community input to improve project development, such that development efforts are sustained and adopted by the community. 5. Limited renewable electricity access and reliance on diesel. The state-owned Tuvalu Electricity Corporation (TEC) is tasked to provide and maintain a safe, secure, stable, financially viable, and economically sound power supply. The power systems on Tuvalu’s outer islands of Nukulaelae, Nukufetau, and Nui were transformed from diesel–powered systems offering 12–16 hours/day of power supply into hybrid solar–battery–diesel systems in 2015 offering continuous 1 Asian Development Bank (ADB). 2017. Report and Recommendation of the President to the Board of Directors: Proposed Pacific Renewable Energy Investment Facility. Manila. The facility streamlines ADB’s procedures, including single source selection of engaged consultants to prepare other ensuing projects under